How to improve personal finance and save more money

personal finance

After going through the pandemic, many of us realized how important it is to “save money” and have a “financial education” but you may wonder, what does this mean, did I learn it in school? Yes, we were never taught how to manage our personal finances. Earning money is hard work, so you must take care of it in an effective and productive way. 

To create financial well-being, it is important to have a good relationship with money and be very patient. 

The first step to organize our finances is to make a budget, a planning of how to organize the income and which are the activities that will be exercised that are the expenses, this to ensure financial sustainability. It is important to understand that expenses should never exceed income, it is suggested to find the balance between income and expenditure, so it is necessary to make a good calculation of our budget, know the expenses, buy consciously and not in an emotional way.

How to organize your personal finance in 6 effective parts

According to some personal finance experts, to have a good financial management they suggest dividing your income in 6 effective parts:

  1. 55% Basic needs: This refers to all fixed expenses such as water, electricity, gas, food, gasoline, rent, house payment, car payment, etc.
  1. 10% Fun: You deserve to allocate a little of your income to spend pleasant and joyful times for you or your family. Enjoy life and don’t let time be spent on just working.
  2. 10% Education: The best investment you can make in your life is in education, train yourself constantly, enroll in courses, diplomas, a bachelorโ€™s, or master’s degree, or if it is difficult for you, read a book or take free online courses, but never stop learning. Remember that education improves people’s quality of life.
  3. 10% Financial freedom: This percentage should be used when you have a medium- or long-term project, it can be for the purchase of a car, a trip, a property or a future project. With this you can advance in achieving some of your dreams without affecting your finances.
  4. 10% Savings: Always allocate this percentage in savings, so you can make it a habit in your life. Avoid taking this money unless it is really an emergency. Consider this percentage of your budget as a life challenge.
  5. 5% Charity: Giving a little of what you receive will allow you to feel satisfied with yourself, somehow it will multiply with many blessings. Remember that to share a little of what you receive is to love and serve others.

The purpose is not to see money as an end but to achieve the goals of your life and make it more prosperous. Good management of personal finances will allow you to have healthy stability to later achieve financial independence. 

There are many ways to improve your personal finances and even more if you want to continue with an entrepreneurial project as mentioned in the 5 tips that will help you improve your personal finance:

1. Educate yourself: Keep training yourself in financial education and avoid spending on things you don’t need, but rather set goals for yourself. 

2. Check your credit status regularly: Maintain a clean credit history, pay your bills on time. 

3. Create a budget: Make a budget plan, use tools that can help you organize your finances and avoid spending more than you earn so you can save money. 

4. Pay your debt: Pay as soon as possible your debts so you can carry out a good management of your finances. 

5. Build your saving: Start saving for a good future, look forward to investing and earn extra money.

To improve your financial habits, it is important to remember that what you can’t measure, you can’t improve.

If you want to know more about how to develop skills to improve your personal, professional, and business life we invite you to subscribe to Hispanic Workforce newsletter here.

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